Stewart v. GGNSC-Canonsburg, L.P.
9 A.3d 215
| Pa. Super. Ct. | 2010Background
- Robert G. Stewart, as attorney-in-fact for Ruth Davidson, sued nursing-home operators for alleged negligent care.
- The dispute was subject to an arbitration agreement mandating binding arbitration under the National Arbitration Forum (NAF) Code of Procedure.
- The NAF forum became unavailable due to a Minnesota consent decree, creating a potential void in the arbitration framework.
- The trial court held the arbitration clause unenforceable because an essential term (the designated forum and its procedures) could no longer be honored, and severability could not save the agreement.
- Appellants argued that the FAA §5 remedy and severability should allow replacement arbitrators or forums and that the agreement should be enforced anyway.
- The Superior Court affirmed, concluding the NAF forum and the NAF Code were integral to the agreement and unavailable, so the arbitration clause could not be enforced.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether forum selection was an integral part of the arbitration clause | Davidson argues NAF is integral to arbitration; replacement would rewrite the contract. | Appellants contend forum is ancillary and severable, so arbitration should proceed with FAA §5 replacement. | Arbitration clause unenforceable; NAF integral, replacement not allowed. |
| Effect of the severability clause when essential terms are unenforceable | Severability cannot save an agreement with an essential unenforceable term. | Severability should preserve remaining terms and permit arbitration elsewhere. | Severability cannot save the agreement; arbitration cannot be compelled. |
Key Cases Cited
- Carr v. Gateway, Inc., 395 Ill.App.3d 1079 (2009) (illustrates severability and enforceability concerns when forum terms are integral)
- Brown v. ITT Consumer Fin. Corp., 211 F.3d 1217 (11th Cir. 2000) (integral forum designation when governing arbitration procedures)
- Jones v. GGNSC Pierre LLC, 684 F. Supp. 2d 1161 (D. S. D. 2010) (NAF forum integral or not; declines to enforce if unavailable)
- Stroman v. John R. Ray & Sons, 923 S.W.2d 80 (Tex. Ct. App. 1996) (severability and integral terms in arbitration context)
- Giant Food Stores, LLC v. THF Silver Spring Dev., L.P., 959 A.2d 438 (Pa. Super. 2008) (contract interpretation and integration principles in Pennsylvania)
- Hernandez v. Carideo, not applicable (not applicable) (not cited with official reporter; omitted)